OCC final rule repeals rule for FSA employment contracts, eases mutual-to-stock conversion process

A final rule that clarifies accounting requirements and makes it easier for federal savings associations (FSAs) to convert from mutual to stock form was approved Tuesday by the Office of the Comptroller of the Currency (OCC), the agency announced Wednesday in a bulletin.

As proposed in January, the final rule also repeals the requirement that employment contracts with FSA employees be in writing and approved by the FSA’s board of directors.

The OCC’s proposed rule responded to recommendations in a March 2017 Economic Growth and Regulatory Paperwork Reduction Act report to Congress by the Federal Financial Institutions Examination Council (FFIEC). The OCC said it received four comments on its proposed rule.

According to Wednesday’s bulletin (2020-60), the final rule is set to take effect 30 days after publication in the Federal Register. In addition to repealing the FSA employment contract rules, the final rule:

  • amends 12 CFR 192 (conversions from mutual to stock form) to –
    • clarify which forms and accounting standards are used in connection with a mutual-to-stock conversion;
    • encourage electronic filing, electronic meetings, and notice by email;
    • reduce the number of copies of proxy materials that must be filed with the OCC; and
    • update cross-references to repealed and integrated rules.
  • amends the securities disclosure exemptions in 12 CFR 16 to –
    • provide that a bank in organization that is issuing securities pursuant to the small issues exemption is not required to include audited financial statements as part of its offering documents; and
    • clarify that all registration statements, offering documents, amendments, notices, or other documents relating to a mutual-to-stock conversion must be filed with the appropriate OCC licensing office on the OCC’s BankNet website.
  • clarifies that the regulations in 12 CFR 19, subpart P, addressing the removal, suspension, or debarment of independent public accountants, apply to insured FSAs and insured federal branches of foreign banks.
  • amends the definitions of “small business loans” and “small farm loans” in the lending limits rule, 12 CFR 32, to align with the language of the call report instructions.
  • includes a preamble discussion whether the OCC should amend its fiduciary rules to –
    • require national banks and FSAs to retain records for fiduciary accounts for “the minimum period required by applicable fiduciary State law,” in addition to the current periods of three years from the later of the termination of the account or the termination of any litigation relating to the account; and
    • expand the list of acceptable collateral for self-deposited trust funds to include additional types of instruments.

OCC Bulletin 2020-60